AVT - Earnings call transcript Q1 2021

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Operator

Welcome to the Avnet First Quarter Fiscal Year 2021 Earnings Conference Call. I would now like to turn the floor over to your host, Joe Burke, Vice President, Treasurer and Investor Relations for Avnet.

Joe Burke

Thank you, operator. Earlier this afternoon, Avnet released financial results for the first fiscal quarter of 2021. The release is available on the Investor Relations section of the company's website. IR slide via will earnings the well on the can today's release of website. as found Avnet's be link the copy presentation accompany that remarks as A of section in the

on most the detail and as forward-looking statements in of described any subsequent are no company forward-looking this Lastly, systems operations, obligation not to chain. guarantee and with company's our undertakes some the economic such Such in and statements and the factors filings XX-K publicly that differences Form could These forward-looking materially this update and date of the on statements. and presentation, SEC. Avnet's XX-Q supply the global and only of speak particular, assumptions recent supply will or customers Phil and to led the information in statements of that contained With its differ cause and CFO. Avnet's employees, that and call those COVID-XX could date forward-looking statements after me the Liguori, to Gallagher. the that, Phil risks, duration Gallagher, actual Tom CEO; Avnet's be Interim and news by the predict, Phil? or contained Today's Several contain in presentation. such release from let conference involve contribute the of are information new results performance, impact in of uncertainties this over to the outbreak turn regarding call are the circumstances difficult scope call

Phil Gallagher

conference of everyone first call. fiscal earnings for XXXX Thank joining you, us quarter you Joe our and year thank for

continued for the dedication throughout pandemic. work start Before by we to and would begin, thanking hard our employees I their like

running safety effectiveness remained the smoothly times, ensuring and as persistence of keeping our of as they've business our priority and shown. During these our I'm possible. proud employees uncertain personally while all health the has

transition, time taken as to focus global our while both taking accelerate COVID-XX us have and reinvigorate Now, priorities results. Avnet X. to Slide both of The enhanced months to internally operations, recent sharpened vision investment the a Farnell. turning to business focus be we've economy the responding steps the actions primary end on components these quarter on of continued pandemic for at supplier the An the for We've growth initial highlights on profitable benefit customers gives here reflects future. Quarter our and the partners the well as of to the the distribution

and share $X.XX. execution, In billion, Our our revenues well and as revenue significantly market diluted earnings per earnings renewed year-over-year drive our share improving was on per prior above combined and both sequentially emphasis were adjusted as diluted guidance. up X.X to conditions, adjusted quarter, the

We're in business most of auto. industrial positive by improvement early out into sentiment they the of we're benefited out in from a variety notably, Our to industry an are from verticals, and services demand XXXX. customers, see look electronic across manufacturing Asia as tailwinds region pleased encouraged hearing further

impact uncertainty the financial by coming economy the in the the how will global remains regarding and operational encouraged we're While pandemic specifically and results, broadly, it chain our supply improvements still quarters.

sequential core the geographic our in billion quarter revenues year-over-year to at sequentially both three Looking and we and components Slide were regions. business on up electronic posted X.X across X, growth all

highest the which positive Avnet, trajectory further year-over-year. markets with extra and The strong parity It but Americas for fiscal design exited constant our the by particularly a at with this was currency As was above the Asia, a on September. is Note, XX% at results parity, in saw all-time year the basis. a vertical seeing growth segment, we design region earlier, referenced expectations bit importantly, and well above we're coming their wins with book-to-bill. increasing of encouraging in an Asia most quarter region activity. sequentially is quarter. high the up XXXX since our week an out largest Really key levels and design We EMEA parity, registrations below exciting aided

seeing certain components in for as we're lead increase the an times progressed. Additionally, quarter

seeing we're products this microcontrollers in for products Specifically, the certain and XG popular automotive increase XX-bit products, related area. specific

me that levels. very was very we backlog, Let our and note which inventory manage our continue we're with strong tightly to pleased

just what mitigate as Our chain teams to forecasts the working Avnet manage our of brings of watching our but to is value very as we're customers extension healthy act work exactly with core proud the supply number This supply. doing of challenging They're in a one have an to during to continuity their regard the supply We're ensure that focus we table. we times. they and do are working of these this are, is The is business the risk. customer's capital chain.

Slide on Farnell a grew X, you'll up currency constant basis. to Turning were sequentially, on XX.X% see sales they

XX,XXX up functionality. We COVID rollout our invested to added optimization to on SKUs ecommerce globally. call. through guiding while to making the to priorities continue tool we vein, our strategically strategic continuing we've in and in Farnell's since the to the are the we organization's footprint. will pricing to you'll our I've plan priorities see of the our value strategic related completed quarter over as invest my on customers the months, primary great opportunity XXX,XXX experience At add in to continues components to Farnell to operations provided us Avnet's company? distribution part We see made the for year challenges, frequently in earnings our this our we past XX recommitted Slide and our execute few similar SKUs near-term past both been customers. segment. improve teamwork of to improvements we I On fiscal digital technology Throughout the despite our Farnell point, a our to for And on serve Ultimately, our and the Progress this to to asked continue action We strengthen user taken online to commitment already effort in our We significant define question the allow progress XX,XXX better address and want months. principles last priority. What X, them enhance the focusing Farnell. products XXXX.

in generates earlier, serve noted of core and globally and I Avnet's combination margin. supplier to operating components Farnell's customers the As us and our distribution competency digital partners capabilities efficiently allow greater

suppliers. this the and revenue share and our to communities and about deliver engineers, to metrics is leading maintaining capture a We've our allow market We're processes more more relationships improve We organization will making world. latest profitability responsive learn allowing One Our changes and support cannot the of around footprint unless highest to markets. in global access our growth way target the offerings. flatter with capital our by [ph] scale external authority, return and moving to we to are priority. insights which digital gain our priorities key to growth key our while increase or world's partners our made to to operations a to do on be us customers improve partners revenue share with and customers our assets operational remains ElementXX provide largest regional and technology supplier

have next all the where to performance our we up bringing strategies possible Global and with to culture Our supplier retention built goals set longtime nothing communicate best is the worked that can engagement, Integrated sustaining earlier service on people employee I'm chapter. proud culture strong VIP we've in are our Summit, expectations the to high we we've of working so host partners. values companywide fosters and to And month paper, our win-win of get to solutions one customers. foundation invest our and And done in IoT opportunity Avnet diversity. environments, Supplier and our pleased we in of recommitted that and this personally thrive to relationships committed because also Building upon were our behind. that the the gets

long-term one importance stakeholders we As recognize communities part and our engaging of of mission sustained creating vision, shared of value. one to as team, our action the and our goal and commitment one

leveraging future to regard ESG to our is more ensure initiatives extending work underway disclosing including and quarters. track Additionally, record, come in we're this our strong to with on

further focus distribution. on me components and digs let the Tom core numbers, to execution Before laser recommitted summarize. We've into

Avnet we are parallel, culture in and capabilities, more investing leveraging digital in are greater we In suppliers an and ensure for strategies to success be upon our customers responsive to long-term. Farnell's our deliver to building value suppliers. and structure Integrated as are needs IoT underpinning We aligning our customers and the both our to positioned and to to

the call financials me let that, to Tom? the with on Now turn quarter. over report to for Tom the

Tom Liguori

call. thank Thank you, you Phil. today's afternoon, for Good and everyone attending

sequentially since revenues sequential our our of progress XX.X%. particularly to XX-week Revenues our revenues line expenses primary capital. of operating earn a share growth been We growth, in quarter, to operations, working Revenues profitability billion, area. operating our were greater a of in declining below priority to our We would implement to businesses, capital was days, or X.X%. working through return actions than sharpen on And a cost to lowest our to our on from our capital, all level we by as Asia. Adjusted made sequential increase in stated revenues our drive XX.X% have held controlled to XXXX. OpEx extra Phil The grew top improve of as percent of and a days X.X to this As continue X%. and the focus billion XX efficiency week the each grew specifically, with quarter revenue improve grew, X.X increased reducing market distribution capital

of reduce as XX debt and positive of Cash of to managing the execution actions use cycle. the our through the consecutive see we dividend. cash guidance well Turning We quarter. demonstrating cash XXX million, X.XX billion working from our billion adjusted totaled these operations cash million returned this our range. above our proceed to both and to eighth capital quarter Revenues were Slide $X.XXX, flow, team's EPS to our and you'll flow results benefited XX, with economic X.X shareholders in

XX XX.X% XXX gross due down by Looking at last the well were revenues to margin million the lower was due as gross as XX up of Adjusted sequentially, expenses income from mix statement, a quarter ago operating million, primarily Asia were points million of XX million to margins. XX.X substantially basis or lower higher EMEA continued XXX a higher a year decline slight the lower expenses revenues. Adjusted expense it's decrease debt. million, XX-week than operating extra quarter, of and to Interest our to to XX% due to sequentially approximately now of week.

On Act. million highlight rate our dollar. segments All prior revenues XX, billion as business a X% And of from US income X.X XX.X% of quarter our a this geographic revenue of was geographic prior was result as quarter, Electronic sequential X% X.X swing On against increase. tax quarter. an euro appreciated regions. the and Slide were and results regions our mix billion our we XX-week the components the two expense X.X unfavorable CARES currency pound to a three growth. from Foreign the the adjusted contributed the increased and basis, versus favorable normalized

encouraged from higher last quarter this As we highlighted, in X.X%, previously quarter than on The gross X.X% quarter an in of decline week margins operating had The basis more as components were segment XX.X% especially Farnell anticipated basis. our the margin as by quarter. for the approximately Asia the volume our improvement a sequentially, totaled electronic sales XX margin. offset in performance operating X% up the were XXX and an in guidance. revenues million, equivalent point

next revenues and We SKUs recover quarters improve to expect control and e margins the improve several operating as capabilities costs. over slowly commerce Farnell as

XXX Our were TI million. revenues quarter this

to TI complete expect XX. the by transition We December

were for week, revenues adjusting Avnet sequentially. extra X% the Excluding and and flat total up TI year-over-year

and X.X remains with to million of Turning with cash on billion available XXX liquidity and liquidity ended cash, our the equivalents Slide the lines of XX, strong. We credit. sheet of balance quarter position and

Our was gross X.X and leverage was leverage X.X. net debt debt

$XX value net per Our share was was book our tangible per and share $XX. book value

capital. we pleased margins work recognize progress do quarter, in profit we returns on are made our on have and While to the the with we

they focused are these getting teams to need to on where Our be.

focus expect see discussed, on forward, execution to quarter-by-quarter with coupled a share Going management continued revenue capital. as of discipline market and working cost to Phil grow and

the on operating minutes few working and a initiatives. spend me our expense capital of status Let

quarter operating reduce Let's per in XX expenses These quarter. a with plan expense. quarter December be last financials. announced by expected to to fully XX are or savings annual operating begin million realized our million We

Day Although two we XX reduction XXX reduction. headwinds, of December foreign XXX Investor we plan our we is have of OpEx of approximately achieved currency OpEx million quarter, years some are that announced anticipate million million. the experiencing XXX we the in on reduction ago. The top Today the million

to of activities, more projects million work outsourcing underway our go. There have distribution lower leads our finance continuing to the cost majority information four are various savings, our that completing contribute and cost center. service streamline to We XX migrating centers, systems

these of the calendar of are All end the expected and are to savings by well underway, year realized be XXXX.

we we days we were the the to our XXs. started On plan working toward are and progress When that capital side, continue steady of XX working mid capital days. this capital our to made range. We've working in mid XX-day initiative, reducing the this quarter, work dropped below pleased

shares the As reduce level million, us our to the over XXXX this generated to debt significant $XX few our these cash lowest since about each enabling XX% to is day years. billion, have last worth and efforts of quarter buyback X.XX flows,

cash we invest the our days target. working on in as net focused to expect revenues we remain inventory economy recover, and capital While

I'll Turning expectations XX, about quarter. our next comments conclude to some with for Slide

revenue to due of revenues of QX, fiscal revenues down of the first in to rolling the our guidance TI we are our For $X.XX. to billion XX to to midpoint are adjusted our XX in X.X included quarter, we in million. the TI off. $X.XX guiding and are EPS guiding million Compared range X.X range

Excluding the adjusted revenues at week, midpoint. and flat forecast are extra to TI QX be for

continue we lower actions summary, to the reiterate EPS to guiding we are by to priorities. of In line Let we our the expect as me take spite December. TI our expected In are will with end profitability. complete in reductions transition higher cost improve of revenues, the

improve We to are in top share line the aligning gain market areas. operations and trends processes our and key

actions intact. line let Operator? to generate the profitability open and our We These our Q&A. committed that, uphold also are and to With and enhancing healthy on return cash our ability balance metric. keep capital for us sheet

Operator

gentlemen, a and we [Operator will session. Ladies you. Thank question-and-answer conducting be you. Thank now Instructions]

Please Our is proceed with first question. Tindle from your question Adam Raymond with James.

Adam Tindle

are afternoon good on press upturn fiscal touched about ROIC. see the wanted an goals, Phil, Okay, top ask growth, continue. thanks just the year I last and two On and just margin will line I generate so you improving year-over-year for line top growth, clarify, to XX% see you 'XX or the declines there. the operating growth? be here you adequate in drivers just implying revenue assumption? less that want that greater you'll that and to Are to nice the than to down that maybe start, fiscal first from that 'XX saying to release and improve

Phil Gallagher

Yeah Adam, thanks.

- okay, If as that you TI okay. yes, today, out net we see is into it

really So out talk in about of the to really we're with The organization, when question that answer drive is looking we're streamline you to yes. second net doing TI, part align script things the is to won't much the your the the we're too structure strategy. the so driving

outlined. clearly share have very goals market We

streamline you a the lot the more into as in are We the lot if at a you businesses will we're putting structure, regions. RNA authority forefront, we of the words, the will of other if putting

global lot about have close standpoint, XXX our obviously okay event. ago a supplier so a VIP with partner on kind suppliers push talked but leveraged bring from that really aligning and And with the regions or critically couple can. we week of really Avnet suppliers, to just So our a and I possibly we about our over the as we have businesses scale an

today be are opportunity. been that's and to supplier the into looking technology for, a making in we We're that proud with to with enabled so distributor the technology customers driving alignment see we're simplification, always work to center So back our aligned, them what basics. to we even down they're upstream stronger the and sure partners, real our but services

Adam Tindle

look the in Okay, million just September in the by would a as the you margin, big we at of at sequentially kind if moving a of from follow grew maybe up revenue parts, and But quarter for as goal greater XX operating Farnell was to margin numbers, flat. be seem quarter second you. term, operating generating opportunity the near look

near what why the I in get margin that with And coming to 'XX? of operating incremental trajectory isn't generating company changes for margin So goal that better greater term? revenue guess to fiscal

Tom Liguori

Tom. it's Adam, Hi,

we'll will obviously, pandemic SKUs, that improvement tried operating need slow online, to to and continue comes lead uplifted that execution been leveled and we the December see As time off is distribution really with to we that's We some script, the do uplift center really start margins. feel back expect be We help Farnell this SKUs. revenue we did operating forward, quarter-by-quarter at to and to this There's running up. right, get the the see going And to go leverage. Farnell be some XXX%. And need adding this We - we hit to do a up to as COVID. going at margins you'll in is quarter. get the We clear quarter-by-quarter. - be have in in headwinds

Phil Gallagher

actually double that. headwinds resetting you those do to that on continuing the we trajectory get Yeah, several top I'll And Tom's We're double quarters. point down to the a over just to to be have of few there. with But operating unexpected we'll margin. next a Farnell

Adam Tindle

you sense, detail. much for Makes the thank so

Phil Gallagher

Thanks Adam.

Tom Liguori

Adam. Thanks

Operator

Thank you.

comes proceed Please with with Sheerin next Stifel. Our question. your Matt question from

Matt Sheerin

for taking questions. Yes, the thanks

around Just outlook on Tom regarding million. SG&A, said think XXX your I you

to TI like Is mix does significantly, So reflect the or toward into fairly backing related EPS Or your of at guide, up gross more also it points net margin least income, away? your so. it terms going going basis in is be looks XXX that weakens?

Tom Liguori

the Matt. those. of is It answered both question, You

quarter, strong had we This revenues.

of both those healthier We TI than help also will and - them. expected had still

million OpEx X-X-X. the they improve they'll December margins. transition for guide December, in XXX The quarter, was As

Matt Sheerin

up cost guide, XXX to from XX think going of so in million for that savings as I well. And Is at $X savings. latest because think looking at in a and the that rate, million then that that here. there's a quarter that on you you're apples-to-apples And then not factor the incremental and were it's just at you million I expenses okay, many XXX, or quarter still bunch great cutting. said - you to of basically be this run $XXX going you're September looking exit quarter until sort sort you're is realize in a

Tom Liguori

rate. exchange actually It's

for about increase. accounts exchange assumption Our a $XX million rate

right. you're Matt, So

they're last place think in reductions talked I place and are today. the quarter in once cost we about

fully X-X-X weakening quarter. the at for So in stronger by place be with million. euro, million, We'd our they're that's XX XXX million, OpEx about the X sense. increasing makes That dollar

Matt Sheerin

you've Okay, Phil, if moving regarding just a And news of latest Xilinx in so. the question the Xilinx great lastly, parts know as a your ask and can couple been I by I years very supplier of AMD. relationships. know in there's I with there relationship well lot is got AMD. as acquisition pending or strong just just a the last

about that or Avnet? So be things or may any going update on beneficial thoughts negative either on that consolidation other are for

Phil Gallagher

thanks, us these both. think the at that. Yeah. looking two there's I'm rumblings here the relationship companies do the risk And this organization, solutions Xilinx feel technology best some to off minimal there press through to with outstanding, relation our AMD of the hot with terrific - they're this we a Yeah, few Appreciate is is very actually combine so centers, were building Matt. data Well, there's the our out as opportunity to start weeks tremendous ago. point. for

So we're positioned think well here. we really

the and point self-sufficient not even this been We're course the feel that communities of any time investment for Xilinx but major at we very negatives, technical positive see two around in or right, any world in it's it. we've days been long with said, don't Xilinx you a about pretty time. As with -

Matt Sheerin

Okay, thanks.

Phil Gallagher

you, Thank Matt.

Tom Liguori

Thanks Matt.

Operator

you. Thank

proceed comes Please Our from from next Ruplu Bank question question. with Bhattacharya your of America.

Ruplu Bhattacharya

are Is about are and And Hi, buybacks priorities M&A? you thanks Are terms your for your you questions. at? what my looking dividend and can talk looking of this at both share for allocation plans the time? taking Maybe you thoughts targets? Tom, the in what any on right capital

Tom Liguori

ever on until since see to on dividend. The support to the the certainty for the liquidity cash priority on in pause really pause, near do intend be with we really we Yeah, that some COVID-XX and term focused changing. buybacks is are an they we're That's us. continue

I last We're M&A. think M&A. active the was of that not part in

that in liquidity. our term, cash suppliers near would or I probably don't have product near think focused but there the on having distribution, customers term more we smaller we've always active. be nothing tuck-ins, said have, line don't we We're

Ruplu Bhattacharya

your Got any goodwill up, can concerns my it just you might charge asset the of investors ago, further you I any impairment, and mean, follow quarters intangible have took maybe and a receivables, impairment then for in impairments for couple on address that write that coming on terms mean, be us to required? any of Or just you I in might your can opinion, about even see down you thoughts do that? up? further talk or

Tom Liguori

of know, are businesses support up, government an any. To haven't I'm has be actually predict, are all, really first performance million We dry collections globally, on so seen good that but collections. I issue. Well, Sure. positive. concerned about was receivables, of inventory, capital to any, we our this we trying we SKUs, of added date working to not smaller haven't seen very added because could quarter for XXX people

Farnell. see focused as We know path the everybody's Farnell. far I Farnell. see to intangibles, the value goodwill with As Farnell. yes, in on quite recovery and in comfortable We're We

we're we in intangible. has As a be Farnell leeway Phil would investing before impairing Farnell. said, of lot

future very be we But it. very forever. want the predict to never can I I on So confident just feel clear.

correcting it's desk continues it proposition issues. and now, in and them get value and that we'll chain, on we the high of propositions. can need business, get value the volume the different things is, We do in that our We're well hours, into on XX really distribution value track. manufacturing buy high the anything see design engineering the continue only the internal the the you side of side as both Farnell can Right business, you that Farnell. your margin upfront do as people to

good you very for that. So us question. address that's letting a Thank

Ruplu Bhattacharya

the all All right, for Thanks thanks. details.

Operator

you. Thank

question next from Our with Tim question. Please your Yang with comes Citibank. proceed

Tim Yang

Hi, question. my thanks taking for

year-over-year quarter from much and were September of of is that the talk just basis cost with that margins higher business. Can real Farnell is how sales incremental from actually on COVID? decline because are operating Your about lower on how for your much mix both and component you

Tom Liguori

Yeah, margin, I then a it's look would And some pullbacks, this say way both you electronic and that as on the components see macro historically see components of degradation in do recovers. little gross and the you gross Asia do electronic mix side, see at when it is Tim economy way during you the of margins view come our as the and we course to back that's we well.

things that side Farnell more control related. is less market have our under this we at the stage I On say would mix, that that

to confident we're As question, faster to I a get Ruplu's going said back. have we

Tim Yang

can it, quarter? just [indiscernible] expenses quantify you of maybe Got you how said last the that much COVID cost

Tom Liguori

but upper they're we're I the But non-recurring them - it's targets anymore, and to but the to breaking out we're OpEx these, hear our that it, anymore, not them, sure single say breaking them. good in would at with managing be we really range is, We Well $XX including we're we're not dealing right. continue we're news them not have million roughly. because may

Tim Yang

the on you mentioned give you several months XX% you us down. TI are ago think I that progress? update you, roughly XX% replacement an Got to can

if Thank great provide that be some still color can would just it you. consolidation vendor you the on given one. So

Phil Gallagher

Phil. is that take this one. I'll Tim, Yeah,

past or frankly in out, And our been TI, working which full quarter Tom small as you really. we've we've three last great. We're TI. then number, the out as we're is creation generation. effectively pointed got that which TI tracking, the of socket, tracking in the and next for we've demand talked So with catch in is will relatively a the cross And pin-for-pin, with designing buckets

registration longer. standpoint of be from about that biggest pole right a excited one win that or bit takes many then longer actually share this now we're design of to are listening our a with being of and go got turn in to have for tends That's they customers pipelines other a that So not bit those exciting the to to and business. little an suppliers go call are for probably And enjoying where as them. opportunity we told ship, a where

to electromechanical So grow tracking other regional individual the way, semiconductors in there's global so level, got opportunity at by customers city, we're and inside to tracked level, - the the we by it from to with and have okay. connectors, lines, country, Otherwise, about daily. passes, XX period years said time XX of being fulfill path period that is one, we've we and go day what gap that left a from in to that months two roughly to

Tim Yang

Great, the color. thanks for

Tom Liguori

Thanks, Tim.

Phil Gallagher

you. Thank

Operator

Thank you. Shawn from question your Harrison with comes Please Capital. next Our [Operator proceed Instructions] Loop question. with

Shawn Harrison

was down at the you Where start it's when fiscal highest really from on congratulations before me revenue Phil, out me, slides improvement of that. Hi, it's from the to if some afternoon and everybody, And accelerate correct XX had I'm to that on good high? what results. number usually if just drill that? could about since in some just Why I comment in you a months see think activity? 'XX. few those are kind questions. the Maybe so stood registration you you do but seeing wrong, probably design

Phil Gallagher

Yeah, thanks, the revenue. wins design Shawn. from Well, there's a there's design on revenue and registrations a and

can So tell quicker it typically to with low-end Yeah, I'll And a FPGA, lot the we regional the on just teams. had depending be is on where to for the technical months control, them revenue. right, all XX you, XX example. today, an technology you're the versus the exciting, our monthly and is phone extremely activity review we really high. managers have with with a it's our And presidents regional

assistance there's the can more at much much the be to in much think with idea speaks centralized online. think cost-effective tool, of And our silver avail I with and have the is years. then putting I done about that embraced. a engineers self-service FAEs digital of geographies up suppliers We that of our and talked and customers we've of done that several customers lot so I these the a what our support, more think so of course what's and more this There's is digitally. accessibility some which the tech a more we've the happening over lot design lining it accessibility, lot to

technical as to is goal Our support deep well. dive

know on accessibility. look that you the at how's So surface happening, it the it's again but if think I I that

customer, do customer. still actually, your call a technical the a they might ago get years or XX and them them call seminar engineers they [indiscernible] You XX today from for that lunch

you're Now more getting to available and much XX XXX. They're accessible. that all

We're measure of seeing compensate our exciting suppliers, and that. supporting them it's Supporting it. we Shawn we regions. they as on people in our Again us So knowing. all supporting

So yeah, the else is pleasant is on surprise revenue, and okay. it's a holding win what design

So registrations, it's win revenue. the just design but not the

you a than if bit will, of business, also is stickiness, have the balance you the little this If more positive.

Shawn Harrison

the lead SKUs out. this clarify the in inventory, Maybe terms part moving in dimensions Farnell it different sides. already, just levels through of two quarter. XX,XXX I great, I said, you It's think times are your had now, you how talk it of of kind customers in And your about slide inventory XX,XXX wanted to given you of of added looking another think at right their

kind Farnell? to new count XXX,XXX XXX of get than point inventory, double put that's of to dollar the to the place at to you SKUs some want in time. So And SKU right? in Is more and that at essentially have what's you amount

Tom Liguori

million. aboutXXX amount The was dollar originally

halfway about there. we're So

Phil Gallagher

that count portion be that, question. SKUs - I expanding our of that okay. a SKU expansion of to lot shown Hope than XXX,XXX are SKUs, SKUs that total the higher expansion is That's just And it. to gets the answered the

confident inventory in position inventories. the On with very we're overall, our feeling

of there's capital, We working AP, of continue lot AR working inventory. parts drive a capital to

we obviously, them. all So of watch three

our our the As coming of with MRP diligently we're out more customers. on sharing script, in today in I pointed is working XX% of forecast or business sorts. an

So just got tighter We're to having be them gaps. major our any not with sure customers seeing covered. even we cadences

I levels in are the think out inventory check. there

we We're ours. confident okay. our with tracked back that they're think I with suppliers. of closer course, And

feeling good pipeline. and the about we're So also that

Shawn. times, bag It's the mixed it mention did I script, lead of out yeah, there. to put So kind in it a just on

and is the But and I do part software kind throw a right it's okay End the it to but anything some rest of the two with the something picture the to suppliers know, out bag. out so is by end weeks, start we're yet, and seems them that you our of the kind we be the like So constraints with because going to might be call see it XG, that of it's one of the, watching if trying and some there customers mixed some out pixels to be filled about talked of it there imagination, tough range. few watching of out as just those four to of stretch there with for the in. I'll dots. High them, we're that's testing could weeks, packaging, distribution they're job job constantly take that have in our tied while closely say, it's to any there connect issues, controller much Right, now, most some back dramatic, they going are doesn't pickup close, a that's but the to of

Tom Liguori

Shawn, up? other any follow

Shawn Harrison

thank Tom, good much. I'm you very

Phil Gallagher

Thanks, Shawn.

Tom Liguori

Shawn. you, Thank

Operator

Thank you.

question Stein with question. comes Securities. next with your proceed Truist from Our Please William

William Stein

Great, for my thanks questions. taking

I sure heard right. to the question maybe up last follow on want First, and just you I make

customer So I think the inventory question levels. was about

into have visibility lots a safety they you broad do? stock than these have want inventories? your typically dislocations is someone conditions of customer Do their you set? sort Are this of what they people that let's very to questionable more and visibility of - wonders reason is the relative into away building say think Do recoveries. in tons any understand big is supply your, and we of sort customer Everyone inventory. squirreling into I see -

Phil Gallagher

them Do them are our Will, a there we answer our teams, chain No, regular on basis? and account Hey is the how out we visibility teams, and a customer their supply into you with doing? meeting meet get inventory? with Do Obviously, every we forecast. and macro have the in view yes regularly no. management

our the forecast up So see down. can in we adjustments or

catch to So We also or have of see on very XXXX XXX with names to building would just the in a household of they're inventory. pieces in analytics if starting you of a up customer But go general play. back I'm they're month customers that would from be good. up and say lot I that that a an talking your ordering the pretty and we we a squirreling part don't customers. to away all point XXXX feeling reconfirm lot demand pick a and that know choosing to to might increase hypothetically quickly and we the feel and I

our where March, worked worked that rate. is we what off. think is in had I the pandemic that then also some timeframe, they've And through concerns, we watch all of April cancellation

and XX%, which the So range, rates push we those is about ins, includes absorber I that pull along that industry, right. for pull mean, shock are can outs that right. outs, which right lines, push XX% and our things ins, see cancellation we're in

or out to the of that role But saying think So there. that's would play. anything part a we us building we're cause not incite inventory of up that there's that

William Stein

of other it premier be how about you. very might was And premier? the thank it helps. the margins where would that of predecessor there part topic with of making with at there talk different directions? lower your premier translated Any update where that still volumes, quite customers integrates Is Avnet the rest One there a of transition relates buying low therefore, that ASP, Okay, margin. sliding to high and was business Avnet, for that and this you. more of then to to sort and Is this transition. concept in graduated function, Is significant customers, as they helpful, lower scale to used bigger obviously, to it a strategy volumes, were done? going concept step it And

Phil Gallagher

- and we opportunity there. we're excited And have great. that's process, the No, but we're this work still is about in

a they CRM, what And if you Farnell's really that as MRO, we're doing got lead information. core, sales, prospecting. customer phone, And So kicking you or of doing the CRM got different contacts. the of introductions, slash information into plus and product kinds got startup in which Farnell that a companies basically, on generating million all Marketo visibility and - the we're new appropriate. And where leader out that it's management or is we're through both will, if sales into taking

big a So of piece that's it.

other we The way, there's that's exciting way, and and the by well, big as product some - add going other back as the lines.

quarter, Avnet they micron of have do on which have great. now mentioned, is didn't we they last micron as an to Well, greater before the As access relationship globally, because we Farnell. example

some and The really is that broad doing lot seeing a Farnell business bring don't stuff, got other we're customers and got in - with engineering we're EMS relationship with one We've and a has MRO help really Farnell we selling. good have, we've opportunities major okay. OEMs doing again, that products lines, card services, baby the to the in for our of line leverage we and introduction in new

of we'll and actually together will, collectively, working the providers. two if Avnet, greater these in So larger to programs where some OEMs have you including further are put penetrate EMF teams okay Farnell,

we're what doing. really that's So

up that's you of if when that's science about haven't We do customers and white, that no, an happens core, will, shift this and be as over black grey okay, might to - that art. you're it - how know when those graduation they what a much look, than the grow talking as I not and

we're black two and other The are managing that. definitely and white, science in

William Stein

Great, thank you.

Phil Gallagher

you. Thank

Operator

Please from Our question. Gausia Chowdhury next proceed Instructions] [Operator with you. comes Longbow Thank question a of Research.

Gausia Chowdhury

afternoon. Hi, good

since that Looking all? book-to-bill typical all? related region at and talk just have wondering mentioned compare restrictions there's seasonality? to additional order just you any Europe has You the about then was if And by they quarter how slow can at or at one October, exiting the shutdowns improved that COVID spend impacted

Phil Gallagher

take I'll so that Tom. that Yeah,

August, the for in all book-to-bills quarter, when the in of yeah, coming Europe about as regions. out but through the July, in a the trajectory quarter. not September they improving at noted September talked were we September quarter was So parity script good

we're so As sit globally in a sitting we in book-to-bill, positive October, Europe. including

related of our not one we've for front centers the COVID proud or as of teams, they've far - day up all down are had logistics running, adjustments, our where this, liners, As we've shutdowns all. of the sure, at been of shut proud and been the all

positive still a continues. So that that's

knows, everyone don't upticks in Europe and managing necessarily. planned and now As have in we're cases are shutdowns through seeing seeing right that. we're any we We that

careful we how our okay. bring We are being employees very work, back to

Americas, negative this point we to will of we've people working we're start well, and be in but they're to be it'll safety have COVID. the look in next check me over okay. very of at weeks in the the yet possibly employees we're couple in that it time to that the the percentages any office, real building seen Let actually their And And a choice not optional that of back Europe, XXX%. making outside as the other optional the making primarily allow and it's it'll increase effects of in reduced

Gausia Chowdhury

you you then kind it just Is there? then rank And receivable timeline will of break that target, Thank could if capital working can to that Okay, levers the XX-day accounts regard or out helpful? for And that? to considered get be to with what be primarily thanks. you've the that pulled you.

Tom Liguori

a be and the process. Sure, it's is that's continued no end really, the calendar of it there, going one item discipline it's of inventory. And focus would get year mix to us payables that XXXX. on There's receivables,

disciplined it. week, very president. process working management every a from forecasts have meeting Every here. the we're their meet getting other a week, businesses We on Every capital. on We with week team we're as our business

for question. an an story going have that we that been rank for execution we don't an - a that it's four where It's to I know we because and So the five have be happen. gaps for say quarters. of the have it's execution Thanks can XX improve months, story or things we execution it's order next

Gausia Chowdhury

you. Thank

Operator

I There back it now you. further Thank remark. any closing are Gallagher will time. Phil questions this at turn to no for

Phil Gallagher

And you again thanks the very all much. participants. Thank thanks. for Great,

that approaches XXX-year my be Avnet about Avnet's end that it. calendar just proud couldn't our that, an our And as over remain customers upcoming In we've close again, achieved, I nimble celebrating down to business some mark, and technological and ups years, we've maintain anniversary, me But history. milestone really be the XXX-year and in we've excited had, discipline. more lot and will stayed our comments ability financial a and with demonstrates acknowledging about suppliers excited be longevity execution. of again, about downs all we're our ups hearing But you'll year Let innovation and Avnet's cycles. XXXX, we by certainly to

hard excited I'm the So and want all people most prior the future throughout I work Avnet's pandemic grateful in holds for Avnet. phases by to still journey. dedication again, of and the talented what once our industry for surrounded to the employees for of continued their thank and some be

for Stay again forward that I thank you. to all earnings Look want January well. again, second with you attending in and safe call. earnings to quarter report. be our speaking today's with So to Thank you fiscal

Operator

conference. and this today's conclude Ladies does gentlemen,

may disconnect participation. lines Thank time. your for your You you this at

Avnet (AVT) 28 Oct 202021 Q1 Earnings call transcript